BROWNWOOD NORTH & SOUTH RY. CO. v. Railroad Commission
| Decision Date | 24 December 1926 |
| Docket Number | No. 356.,356. |
| Citation | 16 F.2d 297 |
| Parties | BROWNWOOD NORTH & SOUTH RY. CO. v. RAILROAD COMMISSION OF TEXAS et al. |
| Court | U.S. District Court — Western District of Texas |
Goree, Odell & Allen, of Fort Worth, Tex., for plaintiff.
Dan Moody, Atty. Gen., and Charles W. Trueheart and Paul D. Page, Jr., Asst. Attys. Gen., of Texas, for defendants.
Before FOSTER, Circuit Judge, and WEST and HUTCHESON, District Judges, sitting under section 266, Judicial Code.
The plaintiff seeks equitable relief, suit filed May 10, 1926, on grounds that the entire period of operation from 1912 to July, 1926, resulted in continuing losses, with no reasonable prospect that revenues will in future meet the costs of maintenance, replacements, and operation and give a fair return on the investment; that the laws of Texas require daily train service under prohibitive penalties; that the Railroad Commission of Texas is without power to authorize abandonment; that, plaintiff having given notice of its intention to abandon operation on July 1, 1926, defendants threatened to enforce the drastic penalties of the laws, and thus compel operation, which would constitute a taking of its property without due process of law; that the salvage value of its property, $34,738, would be lost unless plaintiff is permitted to dismantle its road; that a denial of such rights would deprive plaintiff of its property, its value and use, without due process of law, and without compensation, contrary to the Fourteenth Amendment to the Constitution of the United States.
The defendants plead the general issue to the essential bases of the cause of action, and further that the laws, the enforcement of which is sought to be enjoined, were in effect at the time of plaintiff's incorporation, and thus forming a part of the charter contract; that substantial improvements have been erected by the citizens of May; that abandonment would result in heavy losses to them; that conditions have improved and will continue to improve in the future; that plaintiff is obligated by contract to continue operations, in that the original incorporators of the railway company delivered their stocks, rights of way, and graded roadbeds to "representatives of the Frisco" on that express condition.
The major fact to be determined is whether the continued operation of the road will entail such loss as would result in depriving the company of its property without due process of law and without adequate compensation, and whether there is a reasonable prospect for the future that the road can earn enough to pay operating and maintenance expenses and an excess over that to allow a fair return on the investment.
The law of the case is settled in State of Texas v. Eastern Texas Railroad Company, 258 U. S. 204, 42 S. Ct. 281, 66 L. Ed. 566, State of Texas v. Eastern Texas Railroad Company (D. C.) 283 F. 584, and State of Texas v. Eastern Texas Railroad Company, et al., 264 U. S. 79, 44 S. Ct. 247, 68 L. Ed. 569, also Colorado v. U. S., 271 U. S. 153, 46 S. Ct. 452, 70 L. Ed. 878. They are authority for the propositions that the Interstate Commerce Commission has no power or authority to issue an order for the abandonment of a railroad that is engaged wholly in intrastate commerce. It was declared in Texas v. Eastern Texas Railroad, 264 U. S. 85, 44 S. Ct. 247, 68 L. Ed. 569, supra, that the charter of a railroad company does not oblige the company to operate its railroad at a loss; nor is such obligation to be implied from the acceptance of such charter and operating under it; also that, if it appears reasonably certain that future operation will be at a loss, a railroad company, in the absence of a contract, may cease operations, dismantle its road, and realize its salvage value; also, if the railroad be compelled by the state in such circumstances to continue operation at a loss, it would be depriving it of its property without due process of law.
The accuracy of the documentary data embraced in the many exhibits recording the results of operation, and in the accounting, is without contest. The same might be said as to the law of the case.
In considering the defenses and contentions of the defendants, it is held: That the charter and its acceptance is not such a contract as would compel the railroad to continue to operate its property indefinitely at a loss, nor constitute a waiver by plaintiff of the guaranties secured to it by the federal Constitution. That persons have erected substantial improvements along the railway, and in territory tributary, in the expectation of continued operation, does not burden plaintiff with an implied obligation to do so. That abandonment of itself, with resulting damages to the communities served, gives no cause of action to the individuals affected. Texas v. Eastern Texas Railroad Company D. C. 283 F. 599.
Defendants' claim that the original incorporators of the railroad delivered their stock, rights of way, and graded roadbed to "representatives of the Frisco System," upon the express condition of extensions and continued maintenance and operation of the road, was supported by testimony wholly lacking in certainty as to the parties, the terms, and as to the particular words and phrases which fastened on plaintiff the burden of continuing operation of its road without limitation. The court finds that there was a contract or agreement of the kind stated, but that the evidence does not show that plaintiff was obligated to run the road continuously without limitation, nor that plaintiff has by that contract waived rights accorded under the federal Constitution invoked by it here.
Following the procedure adopted in the Eastern Texas Railroad Case, the plaintiff filed, on August 30, 1924, with the Interstate Commerce Commission, an application for a certificate of public convenience and necessity, authorizing the abandonment of operation of its railroad in interstate commerce. This was referred to the Texas State Railroad Commission, with request to take testimony on the issues raised by the application. These are the same as are presented here, except that abandonment referred to interstate commerce there and intrastate commerce here. The federal Commission made all findings upon the application for abandonment, "having regard for the needs of both intrastate and interstate commerce * * *" (Colorado v. United States, 271 U. S. 168, 46 S. Ct. 452, 70 L. Ed. ___, May 3rd, 1926), but, interstate traffic having been abandoned, this court answers that question solely from the viewpoint of intrastate commerce. Nevertheless, the facts as to property values, the statistical records of economic data, accounts of returns from revenues, expenses, costs of operation, maintenance, and forecasts of future prospects, must be independently found by the court.
The Commission's certificate of abandonment issued March 25, 1926. Its findings, though not binding here, the parties, the issues, and the evidence upon which the Commission acted being practically the same, gives the Commission's findings especial weight. It is a tribunal quasi judicial in character, with well-nigh boundless power and responsibility in the regulation of the national transport. Its recognized experience and eminent ability concerning a specialized subject gives to its reports, orders, and findings, a place corresponding to decisions of our high courts of justice. In the present circumstances, the court feels warranted in considering the action of the Commission as advisory, in analogy to reports of special masters in equity, and, so considering, holds that the findings of the Commission should be and are adopted and confirmed as the findings of this court, so far as applicable to issues common to both inquiries. The report, being a part of this opinion, should be included verbatim as a part hereof, but to do so would make for unusual volume. The report may be found in volume 105, Interst. Com. Com'n R. Reports, 729, being finance docket No. 4296, styled:
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